RBC Pro has published an article by Maxim Slugin, Partner and Executive Director of Jingsh Law Firm, examining the legal and administrative difficulties faced by Chinese businesses entering the Russian market.
Drawing on its experience advising Chinese clients, Jingsh Law Firm has identified the principal issues affecting the willingness of Chinese companies to invest in Russia, localise production and establish a long-term presence in the country. Follow the link to read this and other materials published by Jingsh Law Firm on RBC Pro.
法律就像一根拉杆
The law can be bent in either direction
Frequent changes in legislation, particularly in the areas of taxation and investment, contribute to the perception among Chinese businesses that Russia is a less predictable jurisdiction for long-term planning. The applicable rules may change substantially after a company has already entered the market, which is especially significant for manufacturing and infrastructure projects with long payback periods.
A notable example is the 2025 tax reform, which increased the corporate income tax rate from 20% to 25%, introduced a progressive personal income tax scale with a maximum rate of 22%, and revised the Simplified Taxation System by introducing VAT obligations for certain taxpayers. For investors, such changes create a risk that the financial model of a project may need to be revised after the investment decision has already been made.
The regulation of foreign investment and transactions involving foreign parties is also significant. Although the principal restrictions formally target residents of so-called unfriendly states, which do not include China, the very existence of these regulatory mechanisms reduces the perceived predictability of the Russian jurisdiction for Chinese partners.
These mechanisms include, in particular, special procedures for transactions involving securities, real estate and loans, a special regime governing transactions with interests in Russian limited liability companies, and the mechanism for the temporary administration of foreign-owned assets.
Chinese investors are concerned not so much by the current list of restrictions as by the practice of introducing new approval requirements rapidly in response to foreign-policy developments.
As a result, Chinese companies are concerned that control over their investments may gradually become more complex, including in relation to the disposal of equity interests, repatriation of profits, changes to ownership structures, raising of financing and exit from a project.
The principal requirement of Chinese businesses is therefore predictability. An investor needs to understand in advance which rules may change, which approvals may be required, what tax consequences may arise and how control over the relevant asset can be legally protected.
一个官员的友谊薄如纸
An official’s friendship is as thin as paper
Establishing predictable and effective working relationships with Russian governmental authorities is another significant issue for Chinese entrepreneurs.
Difficulties frequently arise in relatively basic situations, including determining the correct course of action, the required set of documents, the competent authority to which an application should be submitted or the procedure for correcting errors.
In Writing and in Person
Russian administrative practice relies more heavily on formal written responses, prescribed time limits and references to legislation. In China, by contrast, businesses are more accustomed to direct contact, practical guidance and prompt explanations that avoid open disagreement.
In practice, this means that a formal response does not always resolve the company’s specific issue and may leave a foreign investor with the impression that it has received insufficient administrative support. The investor may consequently postpone or abandon its plans.
The Chinese side may perceive this approach as an adverse administrative barrier because it increases market-entry costs, extends project timelines and reduces its willingness to make long-term investments.
One Law, Different Regions
Another issue viewed ambiguously by Chinese companies entering the Russian market is the inconsistency of regulation and enforcement across different regions.
As a matter of law, the same federal rules apply throughout Russia. In practice, however, local approaches to tax, customs and migration matters may differ substantially.
This has practical significance for Chinese investors. The region in which a project is located is generally selected by reference to the cost of land, the tax burden, the availability of personnel, logistics, the regime applicable to the industrial site and the expected timing for importing equipment.
If it subsequently becomes apparent that similar matters are resolved more quickly, or under a different procedure, in a neighbouring region, this may undermine the project’s financial and operational rationale.
Taxation
Taxation provides a particularly clear illustration of regional differences. Available incentives, investment regimes and approaches to substantiating expenses, permanent establishments and tax audits may vary.
Customs regulation is formally uniform, but in practice the classification of goods, adjustments to customs value, the application of risk profiles and the volume of requested documents may affect the timing and cost of supplies differently.
Migration Procedures
Migration matters are equally sensitive. Chinese businesses frequently bring engineers, technical specialists and managers to Russia. The applicable procedures for obtaining work permits and visas, the actual time required to process documents and the practice of dealing with local migration authorities are therefore critical.
The issue is not the existence of different rules as such, but the need to understand how those rules are applied locally.
Legal support for such projects should therefore begin with a preliminary assessment of regional practice in the areas of taxation, customs, migration and administrative regulation.
目前还不清楚如何计数
It is still unclear how the calculation should be made
For Chinese investors considering the localisation of production in Russia, the regulatory environment is often a key source of risk.
On the one hand, they are interested in establishing factories, assembly facilities and service centres and operating in special economic zones. On the other hand, they require predictable rules, transparent procedures and a reasonable balance between governmental control and freedom of commercial activity.
Proving Localisation Is Difficult
The process of confirming the Russian origin of industrial products is a notable example.
This mechanism is intended to distinguish genuine localisation from minimal processing. For investors, however, it involves a number of practical complexities.
When planning to assemble specialised machinery in Russia, Chinese manufacturers may discover that importing a chassis from another EAEU country does not in itself generate points required for the product to be recognised as Russian.
As a result, in 2025 a number of manufacturers received initial refusals from the Russian Ministry of Industry and Trade to include their machinery in the Register of Russian Industrial Products.
At the same time, Russian Government Resolution No. 719 permits a component to be treated as Russian where at least 50% of the relevant manufacturing operations, including welding, painting and final assembly, are performed in Russia.
In practice, this qualification is frequently overlooked, delaying the launch of a project and creating uncertainty.
The Government Commission Again
Ownership-structure requirements are also highly significant. In certain sectors, foreign participation is restricted or requires approval from the Government Commission on Monitoring Foreign Investment.
Investors must therefore assess in advance not only the commercial aspects of a project, but also its corporate and governance structure.
Interest in Russian industrial sites nevertheless remains strong. Special economic zones and technology parks attract investors through tax incentives, infrastructure and opportunities for technology transfer.
However, Chinese investors frequently expect standardised conditions and long-term guarantees, whereas Russian practice often depends on the particular region or competent governmental authority.
从“那里是可能的”这个词
Based on the understanding that “it is permitted there”
Customs regulation is one of the first practical issues encountered by Chinese businesses when entering the Russian market and importing equipment, components or finished products.
Despite the existence of common EAEU rules, the principal practical difficulties relate to customs value, classification under the EAEU Commodity Nomenclature for Foreign Economic Activity, the volume of required documentation and the time needed for the release of goods.
Adjustment of customs value remains one of the most sensitive areas. For a Chinese investor, it may result in additional payments, the need to provide security, disputes with the customs authorities and interruptions to the movement of goods.
Where equipment is imported for the launch of a production facility, such delays are particularly critical because they disrupt the project schedule and increase costs.
Classification under the EAEU Commodity Nomenclature is equally important, as the applicable customs duty and the list of required permits depend on the selected commodity code.
If the code is revised after the transaction has already been structured, this may alter the project’s business model, which the Chinese partners may have calculated at an earlier preparatory stage.
The System for Confirming Expected Goods Deliveries, known by its Russian acronym SPOT, presents an additional difficulty.
This system applies where goods acquire the status of EAEU goods following customs clearance in another EAEU member state and are then transported by road into Russia.
In such circumstances, a delivery document must be submitted to the Federal Tax Service in advance, a security payment must be made, a QR code must be obtained and provided to the carrier.
Errors in the submitted information or discrepancies with the shipping documents may significantly complicate the importation of the goods.
The principal customs-related difficulty therefore lies not only in the amount of duties payable, but also in the inability to determine accurately in advance the timing, cost and administrative complexity of the import process.
Legal and customs support should therefore begin before shipment. The parties should verify the commodity code, pricing structure, payment documents, technical description of the products and evidence supporting the declared customs value.
不要害怕法庭，要害怕法官
Do not fear the court; fear the judge
When entering the Russian market, Chinese businesses regularly encounter specific features of the Russian judicial system.
First, foreign partners are concerned about the duration of proceedings. Cases may take longer than expected because of the volume of evidence, the need to obtain expert opinions, repeated adjournments and successive appeals before several levels of court.
Second, the procedure for obtaining interim measures is not always straightforward. The applicant must provide persuasive documentary evidence demonstrating that enforcement of a future judgment would otherwise be impossible or materially complicated.
For foreign businesses accustomed to more flexible and rapid mechanisms for preserving a debtor’s assets, this evidentiary burden may constitute a serious obstacle.
Additional risks arise in relation to the actual enforceability of judgments. Chinese businesses clearly understand that winning a case does not necessarily guarantee recovery: assets may have been transferred, while enforcement proceedings are not always effective or prompt.
Chinese entrepreneurs seeking a practical result while preserving commercial relationships therefore often prefer alternative methods of dispute resolution, including negotiations, mediation and arbitration.
They seek to include pre-action settlement mechanisms and arbitration clauses in their contracts from the outset, thereby reducing their dependence on state courts and limiting the associated time and financial costs.
